How payment orchestration can help make and save money in your business

Cost-saving initiatives have leapt to the top of the agenda for many businesses as they continue to re-build after the pandemic. Kristian Gjerding, CEO of CellPoint Digital, explains why those who invest in payment orchestration will reap long-term financial benefits.

For businesses that have used the same payment systems for years, the cost of introducing a new one may seem counterintuitive, but the long-term financial gains of using a payment orchestration platform make it a worthwhile investment.

Invisible to the consumer, ‘payment orchestration’ covers the software, systems and services that authorise and process payments. Visible to the merchant, it optimises how these systems work together to ensure speed, security and efficiency. But how can it reduce costs?

Intelligent routing

One of the most important ways a payment orchestration layer can boost your bottom line is by allowing you to automatically route transactions to lower-cost payment processing options.

At a basic level, payment routing involves merchants working with multiple partners to send payments in different directions. Intelligent or smart routing is a data-driven approach which helps streamline the payments process with specific goals in mind, such as reducing costs.

This is where an orchestration platform comes in. It allows transactions to be routed to the best performing payment service provider (PSP), which can help boost conversion rates as well as reduce costs.

Furthermore, payment orchestration prevents merchants from an overreliance on a single payment service provider (PSP) or acquirer, where they have control over the payment flow, and their payment platform uptime. The provider might also route your transactions to an acquirer that is suboptimal for you, meaning you lose out by being forced to accept unfavourable pricing.

A payment orchestration platform gives you full control over your transaction flow and allows you to set up real-time rules for switching transactions. Not only can this optimise acceptance rates, it also allows for failed transactions to be re-routed to the next acquirer.

Cross-border benefits

Merchants with global growth ambitions need to optimise their business by entering new markets and regions. Key to this is appealing to customer bases worldwide by ensuring payment processes are relevant and frictionless.

Using payment orchestration, you can easily adapt your checkout process to accommodate the most relevant payment methods in each region, display amounts in local currencies, remove irrelevant fields and even direct those transactions to payment partners who specialise in your merchant type and region.

Saving time and money

The savings to be had from having a payment orchestration platform are not just financial. Adding new payment options and integrating multiple PSPs can be a challenging and time-consuming process. This can lead to longer time-to-market and decreased competitiveness.

Because payment orchestration automatically reconciles all e-commerce transactions, merchants can save the time as well as money it takes to carry out manual reconciliation of every acquirer.

Payment orchestration also provides merchants with the resilience and flexibility to adapt to any market changes, for example changes in consumer payment preference shifts or new payments technology. With the rapid growth of alternative payment methods (APMs), such as buy now pay later (BNPL), payment orchestration is a valuable tool to help merchants adopt APMs without the need for further in-house technical development.

Fighting fraud

Finally, payment orchestration can provide a valuable shield in the fight against fraud. Global losses from payment fraud tripled from $9.84 Billion in 2011 to $32.39 in 2020. When you consider that payment fraud is expected to continue increasing and projected to cost $40.62 billion in 2027 – 25% higher than in 2020 it’s clear any fraud defence could have a potentially dramatic impact on revenue.

Without payment orchestration, transactional data is spread over multiple gateways and payment providers, which makes it significantly harder to detect fraud. With payments orchestration you get real-time visibility and analytics, which can flag potentially fraudulent payments before they are processed.

Payments orchestration is a robust and cost-effective solution for end-to-end payment processing, which offers easy access to alternative payment methods, which will be crucial for post-pandemic success. By introducing an orchestration-first strategy, merchants can capitalise on all their market has to offer without incurring the traditional costs.